Commercial banks generally charge lower interest rates than other lending institutions because

Question

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Commercial banks usually take only the best credit risks, i.e. borrowers who have a good credit history and are considered less risky. This allows them to offer lower interest rates compared to other lending institutions who may have to charge higher rates to compensate for the higher risk of default on their loans. Additionally, commercial banks have a stable source of funding through deposits, which also allows them to offer lower rates.

Commercial Banks Generally Charge Lower Interest Rates Than Other Lending